What Is Referral Rate?

Referral Rate tracks the percentage of your customers who refer your product to others, typically through a structured program, referral code, or word-of-mouth channel you can track.

It’s a practical way to measure customer advocacy—beyond intent-based metrics like Net Promoter Score (NPS). Where NPS asks if users would recommend, referral rate measures if they actually do.

Formula: Referral Rate (%) = (Referred Customers / Total Customers) × 100

• Referred Customers = New customers acquired through a referral
• Total Customers = Customers active during the same period (or eligible to refer)

Referral Rate can be tracked monthly, quarterly, or aligned with referral program windows.

​

Why Referral Rate Matters in SaaS CX

Referrals are more than acquisition—they’re a CX success signal. Here’s why this KPI deserves your attention:

Trust-Based Growth: Referrals come from trust. High referral rates suggest customers believe strongly in your product experience and value.

Low-Cost Acquisition: Referred customers typically have lower CAC and higher conversion rates, driving efficient growth.

Validates Customer Loyalty: If users are putting their name behind your product, it means they’ve found real value—and want others to benefit.

Closes the CX Loop: Referral behavior reflects the full customer journey—from onboarding to advocacy—and helps identify who your best champions are.

​

How to Measure Referral Rate

To measure it:

1. Define what counts as a referral—e.g., tracked link, code, or invite
2. Track the number of referred new customers during the time period
3. Divide by your eligible customer base
4. Multiply by 100

Formula:  Referral Rate (%) = (Referred Customers / Total Customers) × 100

Tips:

• Exclude ineligible users (e.g., inactive customers, trial users if not allowed to refer)
• Use referral tools (e.g., ReferralCandy, FirstPromoter) or CRM tags to track
• Consider measuring by customer segment or cohort to identify power referrers